PLANT

Bank of Canada expected stand pat on interest rate

Locking in at 0.5% as uncertainty continues to swirl around the US policy agenda on trade and taxation.


OTTAWA — The Bank of Canada is expected to stick with its benchmark interest rate today even though the economy is off to a stronger-than-expected start in 2017.

Analysts widely predict governor Stephen Poloz to keep the rate locked at its very low level of 0.5% as uncertainty continues to swirl around the US policy agenda on trade and taxation.

Some economists have also been pointing to Canada’s weak wage growth and its fading underlying inflation as other reasons for Poloz to hold off even longer.

The underlying or core inflation rate – which strips out some of the more volatile consumer items like gasoline – has softened since the beginning of the year and has yet to catch up to the rosier economic momentum.

On the other hand, the central bank has already raised its 2017 growth projection after solid data rolled in for other areas such as employment, consumer spending and residential investment.

Observers will also scrutinize the commentary in the bank’s statement for clues about its thinking on the trajectory of the economy.

News from © Canadian Press Enterprises Inc. 2016

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